Hi everyone,
I am currently working on my first investment property ( might be two SFHs bought as a package). I would like to get a 100% mortgage. I am going to be renting out both of these houses. I currently work full time, appx 40k/year. My credit score is in the lower 700s. I have some debt (school/credit cards) that I’m paying off.
What is the best route for me to take? Should I go to a local bank? or a mortgage agent? Can I get a preapproved loan prior to having a certain home that I am purchasing?
Is there any specific type of loan that I should be looking for? How do I keep my interests rates low?
Some of these questions are broad, but I figured I should throw them all out there.
If there is someone on here that deals with NYS mortgages, I would love to hear what you have to say.
Thanks in advance for your help,
Herschel
I just sent you a private message.
Hello Herschel,
Sounds like you should be ok on getting approved with that credit score.
A local bank would not offer 100% investment loans. Building a relationship with a mortgage professional will be extremely important for you. Brokers are usually signed up with 100s of lenders wich have a variety of programs to fit your needs. Some of these programs include reduced documentation for those that do not want to show income or assets.
Most professionals prefer to have preapprovals. Preapprovals also give you stronger negotiations with sellers.
Investment Loans(is it Ben?) and others,
Thanks for the reply. I am currently trying to find a mortgage broker in the area. Also, when you say that local banks will not 100% finance, what will they finance? and is their loan generally lower interest or higher?
Also, it seems that many mortgage brokers do not want to deal with SFHs that are in the 15-25K. Is this normal? Is it because they do not make any commision or because the loan companies do not want to do it? I dont mind working out a deal with the broker to make everyone happy.
Thanks again for everyones help. I am new to this so the simple things still take time for me to understand.
Herschel
A lot of lenders have a minimum loan amount of $30,000.
Most of the programs available for investors are set up as 1st/2nd mortgage combos. One, to avoid PMI and two, they generally dont have programs that go to 100% with one loan. The lower loan amounts will have higher rates as well.
It is very difficult for a broker to be compensated for his time in doing these lower loan amounts. Lenders and states have limits which we have to stay within. Most of these limits are barelly enough to cover just the basics.
I usually accept loan amounts of no lower than $75,000. Sometimes specaial exceptions can be made if an investor is doing several transactions per month.
If you use a local bank that also has a wholesale mortgage branch, such as Bank of America, Washington Mutual, Wells Fargo…they will look at the same products that brokers have available. Then you still run into low loan amount issues. These banks, along with your local family banks can also do loans as commercial but most the time need 15-20% down. The rates would be higher and usually set up as balloon mortgage. (meaning they would need to be refinanced after several years).
There are really no deals that you can work out with a broker. What we can get paid is limited by RESPA (government). Anything paid outside of what happens on the transaction is illegal.